An internal memorandum from Pfizer, the world's largest drug company, says Stuart Montgomery would be happy to become a paid adviser and declare an interest to the Committee on the Safety of Medicines (CSM) once the drug, an antidepressant to rival Prozac, had been through the licensing process.

The drug, sertraline, which acquired the brand name Lustral, became a billion-dollar success, but is now one of several banned from use in children in the UK because of evidence they can cause them to become suicidal. Their use in adults is under investigation.

Dr Montgomery says his advice to Pfizer in 1989 was permissible because he was not receiving money from the company at the time. But Kent Woods, chief executive of the drug regulatory body which grants licences on the advice of the CSM, said such conduct was "absolutely unacceptable".

"Not only does each member [of the CSM] on appointment sign a letter ensuring confidentiality but at every meeting, the chair as a matter of routine reminds everybody that proceedings are confidential," he said. If the company had questions, they should have talked to officials of the Medicines and Healthcare products Regulatory Agency (MHRA), not the independent CSM experts.

Critics say the case exposes weaknesses in the drug licensing system, run by a regulatory body which, other papers obtained by the Guardian reveal, has an unquestioning relationship with drug companies.

That relationship is so close that the pharmaceutical trade body in June drew up a business plan for the regulator, concluding: "Our priorities are aligned."

In the first of a two-part investigation into the influence of the drug companies over doctors and government, the Guardian examines the intimacy between the industry and the regulator and the absence. Tomorrow it will focus on the sponsorship, consultancies and fees paid to doctors by drug companies.

The MHRA is responsible for licensing medicines and regulating the industry. It relies on the advice of the independent experts on the CSM when it grants a new product licence. These experts, from all fields of medicine, are supposed to declare any pharmaceutical company interests, such as consultancies, fees and shareholdings, and must leave the room when drugs from companies that have paid them are discussed. During his time on the CSM, Dr Montgomery disclosed payments for lectures and advice from Eli Lilly, makers of Prozac, Organon, Beecham, Merck, Sanofi, Glaxo, Novo, Jouveinal, Duphar, Wyeth and Almirall.

Dr Montgomery, who held a joint post with St Mary's hospital, Paddington, and Imperial College in London, was a psychiatric expert on the CSM. His opinion was crucial in 1989, when the Medicines Control Agency as it was then known was considering an application from Pfizer for a licence for sertraline.

A confidential internal memorandum from Pfizer, dated April 24 1989 which was submitted in evidence to a recent court case in the US has been obtained by the Guardian together with Mind, the national association for mental health, which has been campaigning for better drug regulation. Richard Brook, its chief executive, will today call for an external inquiry. "There is clear confusion about the role that Dr Montgomery was playing in this situation," he said.

"It also makes it very difficult for outsiders to believe there was not a serious conflict of interest when one of the major experts on depression involved in the CSM is actually speaking to a drug company about how they best present their results for licencing."

Dr Montgomery became a professor of psychiatry at Imperial College in 1993. The journal he edits, International Psychopharmacology, regularly publishes company-funded studies of antidepressants, as other journals do. He authors many of the papers, often jointly with other senior figures in the field.

The memo reveals that Dr Montgomery met Pfizer officials at St Mary's. He told them the committee had accepted that the drug was effective but "the safety analyses require re-presentation" and he advised them how to go about it.

He told Pfizer they must appeal against the CSM's initial decision. The memo reveals that Dr Montgomery is not going to declare an interest in Pfizer.

"He would still like to remain a disinterested party at the CSM till the appeal was heard," says the memo. "Thereafter he would be happy to act as an adviser to Pfizer and declare an interest."

The Pfizer drug got its approval first in the UK. Other European regulators were not happy that the data from clinical trials proved it worked.

Dr Montgomery said he had no conflict of interest over Pfizer. "My comments to Pfizer in 1989 were the usual clarification of the objections of the CSM to their application. At that time I had no conflict of interest with Pfizer, I was not a paid consultant, I was not in receipt of research grants from Pfizer, and I did not own shares in Pfizer," he said in an email to the Guardian.